Economics Unit 1 Chapters 1 & 2

question

What are the four factors of production
answer

Land, Labor, Capitol, Entrepreneurs
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What is the fundamental problem of economics
answer

Scarcity
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Economic Interdependence
answer

People dependent on other people for goods and services
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Who has a modified private enterprise system
answer

United States
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Gross Domestic Product
answer

dollar value of a country’s goods, services and structures
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Opportunity cost
answer

the cost of the next best alternative when a choice is made
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Land
answer

natural resources not created by humans
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Capitol
answer

factor of productions that includes tools, equipment, machinery and factories used in the production of goods and services
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what is Scarcity
answer

A condition when a society does not have enough resources to produce all the things people want
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Competition
answer

Seller struggling to attract consumers while lower costs.
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Profit Motive
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encourages people and organization to improve their material well being
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Capitalism
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private citizens own the factors of production
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What problem does economics tries to solve?
answer

How to satisfy unlimited wants with limited resources
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What is the government role in a mixed economy?
answer

It is the regulator in charge with preserving competition
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What is a mixed economy?
answer

is a modified private enterprise economy.
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What are the characteristics of Capitalism?
answer

Private property rights, economic freedom, and profit motive
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What does voluntary exchange mean?
answer

People freely and willingly engage in market transactions
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Market Economy
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Does not provide for everyone’s needs
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How do consumers exercise their power in the American economy?
answer

by deciding what to purchase
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what role does the government play?
answer

protector, consumer, regulator and promoter of economic goals.
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An economy at its production possibility frontier
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is operating at full potential
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What is a production possibility frontier?
answer

a diagram representing various combinations of goods and services that an economy can produce with all its resources fully employed
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What is a free enterprise economy?
answer

where consumers and privately owned businesses answer the three basic economic questions.
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What is the standard of living?
answer

The quality of life based on the possession of necessities and luxuries that make life easier
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What is an economic system?
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An organized way of providing for the wants and needs of a society.
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What is a market economy?
answer

Basic economic decisions are made by people and firms acting in their own best interests.
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What is a command economy?
answer

basic economic decisions are made by a central authority
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What is Gross Domestic Product?
answer

The dollar value of all final goods and services measured by the country’s total production output.
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What is paradox value?
answer

some necessities have little value while some non-necessities have a higher value.
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for something to have value
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it must have utility
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What are examples of interdependence?
answer

actions in one part of the country have an economic impact elsewhere.

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